Here are CoreLogic’s five facts and predictions for 2015:
1. Millennials will start buying
The young Generation Y experienced a strong boost in job growth that will help spur housing in 2015. Millennials posted a 3% improvement in employment growth, which is one percentage point higher than the overall employment growth rate.
“While part of the improvement is the demographic transition of Millennials as they age, it is still very good news, because this age cohort is the key first-time homebuyer segment,” the report said.
2. Oil price drops will benefit housing
“Households in the U.S. spend more than $1,800 on energy-related costs annually and 22% of that energy consumption is due to residential real estate,” CoreLogic said. “So while the drop in oil prices has typically been linked to a reduction in driving-related expenses, it clearly also reduces energy-related expenses for residential real estate.”
3. Home price growth will remain muted
Home prices growth is forecasted to be fairly muted going forward as mortgage rates continue to hover around 4%.
“While rates are still very low, home prices are not. It is clear that the low-rate environment has benefited home prices, as price-to-income and price-to-rent ratios are high,” CoreLogic said.
4. Houston will be the most interesting housing market to watch
Houston continues to thrive thanks to its strong energy market and household growth over the past few years.
5. Housing demand will jump
Overall sales are projected to increase to 5.8 million in 2015, up 9% from 5.3 million in 2014, while total housing starts are expected to reach 1.1 million in 2015, a 14% year-over-year increase.
However, this is still 23% below the 1.45 million average seen over the last 50 or more years.
The 30-year fixed mortgage rate is only expected to rise to 4.3%, up from 4.2% in 2014.
“Overall, the economy finally appears to be gaining enough momentum to help provide the support that the housing market has needed for stronger recovery. The combination of stronger employment growth and especially millennial job growth makes for solid footing for the real estate market,” the report said.